1.5 Growth and evolution questions for IB Business Management

Kalinda Surf Wax

[1] Kalinda Surf Wax (KSW) is a partnership based in Byron Bay, Australia, owned by Jarrah Collins and Linh Dao. Since 2012 KSW has made surfboard wax from beeswax and coconut oil, sold in recyclable cardboard tins through 60 independent surf shops along the east coast of Australia. KSW’s brand is well known among local surfers, and its wax has won two industry awards for grip in warm water.

[2] For the past three years KSW’s sales volume has hardly changed, at about 180 000 tins a year. Two larger competitors have launched cheaper waxes, and surf-shop owners report that most surfers in the region already buy KSW or a rival brand. Profit is still healthy, but Jarrah worries that the product is close to the end of its maturity stage.

[3] Jarrah wants to extend the product life cycle by selling KSW wax in Indonesia and Portugal, two growing surf markets. This would mean finding distributors abroad, translating the packaging and paying for export shipping. Linh prefers to modify the product: she has developed a “cold-water” formula and a wax for stand-up paddle boards, which could be sold through the existing surf shops. Her version would need AUD 45 000 of new equipment and some retraining of KSW’s six production workers.

[4] The partners have AUD 70 000 of retained profit available and do not want to borrow. Both agree that KSW must not lose its reputation for high quality and natural ingredients.

Hollis Brickworks

Hollis Brickworks (Hollis) is a public limited company that makes clay bricks at a single site in Leicestershire, England. Its kilns run 24 hours a day. Over the past ten years Hollis has expanded the site three times, adding larger kilns and automated cutting machines. Table 1 shows the company’s estimated annual total costs at different levels of output.

Hollis currently produces 40 million bricks a year. A national house builder has offered Hollis a five-year contract that would raise annual output to 50 million bricks. To meet it, Hollis would have to run older back-up kilns, hire agency staff for night shifts and add a fourth layer of supervisors.

Table 1: Estimated annual total costs of Hollis at different levels of output

Read the resources and answer the questions that follow.

Ofure Lights Ltd (OL)

OL is a social enterprise in Benin City, Nigeria, founded in 2019 by Ofure Igbinedion, an electrical engineer. It sells solar home kits (a lantern, two bulbs and a phone charger) to households with no connection to the electricity grid. Customers pay a deposit of NGN 4 000 and then small weekly payments by mobile phone for 12 months, after which they own the kit. OL reinvests 80 % of its profits. Its mission is “clean light for every off-grid home in West and Central Africa”. OL has 38 000 customers in southern Nigeria and wants to expand into neighbouring Cameroon.

Resource 1: News article, *Central Africa Energy Review*

Around 6 million Cameroonians live without electricity, most of them in rural areas, where families spend up to a fifth of their income on kerosene for lamps. Kerosene smoke causes breathing problems, and lamp fires injure hundreds of children every year. Mobile money is used by most adults, mainly through two large networks. Cameroon has two official languages: French is spoken in eight of its ten regions and English in the North-West and South-West regions, where an armed conflict since 2017 has made travel and business dangerous. Several foreign solar firms have entered the market, but few offer pay-as-you-go payment.

Resource 2: Email from Babajide Adeyemi, OL’s finance manager, to Ofure

Entering Cameroon will cost about USD 900 000 in the first two years: warehouse, staff, stock and marketing. We have two offers. An impact investor will lend USD 1.2 million at 8 % interest over five years. A foundation will give a grant of USD 400 000, but only if we report every quarter on the number of children who no longer use kerosene lamps. Remember that 9 % of our Nigerian customers fall behind with weekly payments, and the naira has lost value against the US dollar, which makes our imported solar panels more expensive.

Resource 3: Social media posts from OL customers in Nigeria

“My children now do homework at night without smoke in their eyes. Thank you OL!” (Esosa, Edo State)

“My kit stopped charging three weeks ago and I am still waiting for the repair man. I still have to pay every week.” (Chinedu, Delta State)

Resource 4: Email from Mme Ngono, director of Fondation Mbouda Santé, a Cameroonian NGO

Our 60 village health workers in the West and Littoral regions visit thousands of households every month. They know every family and are trusted. We would be happy to sell OL kits and collect information on kerosene use in return for 10 % of the sales value. Our workers speak French and local languages; very few speak English.

Resource 5: Selected data

Kestrel E-Bikes

[1] Kestrel E-Bikes (Kestrel) is a private limited company based in Utrecht, the Netherlands. It was founded in 2016 by Daan Visser and Femke de Groot, two engineers who designed a lightweight electric cargo bike for parents carrying children around the city. Kestrel assembles 9 000 bikes a year in a small factory and sells them online and through 40 independent bicycle shops in the Netherlands and Belgium.

[2] Demand has grown quickly. Kestrel’s order book is full for the next seven months and some customers have cancelled their orders because of the waiting time. Kestrel buys its battery packs in small quantities from a supplier in Germany and pays a higher price per pack than its larger rivals. Daan believes that Kestrel’s average costs are too high for it to compete on price as the market becomes more crowded.

[3] Daan and Femke have set a strategic objective of selling 30 000 bikes a year within four years. They are considering two ways of growing:

[4] Option 1: build a second, larger assembly line next to the existing factory and recruit 60 more workers. This would be financed by a bank loan and retained profit, and would take about two years to complete.

[5] Option 2: acquire Velomaas, a struggling family-owned bicycle maker in Rotterdam. Velomaas has a modern factory that is only half used, an experienced workforce of 85 people and a network of 120 retailers in Germany and France. Velomaas makes traditional bicycles, has had three different managing directors in five years, and its workers fear that Kestrel would close their factory.

[6] Femke is worried that rapid growth could change Kestrel’s informal, close-knit way of working, where every employee knows the founders personally and suggests design improvements.

Pinewood Print is a commercial printer in Halifax, Canada. It prints product catalogues for retailers. For an order of 20 000 catalogues on its existing press, the fixed costs of setting up the job are CAD 18 000 and the variable cost is CAD 0.60 per catalogue.

Pinewood Print has bought a large high-speed press. For a new order of 60 000 catalogues on the new press, the fixed costs of the job are CAD 30 000 and the variable cost falls to CAD 0.45 per catalogue because the press wastes less paper and ink.

Beco Express (BX)

Read the resources and answer the questions that follow.

Beco Express (BX) is a social enterprise in São Paulo, Brazil, founded in 2021 by Tainá Ribeiro and Diego Alves, who grew up in one of the city’s largest favelas*. Many national courier companies refuse to deliver into favelas, so residents’ online orders are often returned or left at distant collection points. BX collects parcels from courier depots and delivers them through the narrow alleys (becos) on bicycles and motorbikes. It employs 110 young people from the favela as riders and pays them per parcel. BX is a private limited company and reinvests its profit; its mission is “every address counts”.

* favela: a low-income, densely built neighbourhood, often on a hillside, in a Brazilian city.

Image: a young rider in an orange BX jacket carrying a large parcel up a steep, narrow stairway between brightly painted houses. Text on the van parked below: “Beco Express – every address counts”.

Resource 1 – News article from *Periferia Notícias*

“Couriers don’t come here”: the favela start-up that does

More than 1.5 million people in São Paulo live in favelas, and many have stopped shopping online because parcels never arrive. Courier companies say the alleys are slow and unsafe. BX, which says its riders “know every door”, has grown quickly, but critics say it relies on young people paid per parcel with no employment contract.

Table 1: Deliveries to favela addresses in São Paulo, 2025

Resource 2 – Social media posts from Kauã, a BX rider

Two years with BX. I know every beco from the top of the hill to the bottom. Grandmothers wave when they see the orange jacket. This is the first job where I feel people respect me. [1/2]

But I get BRL 3.10 a parcel, I pay for my own fuel, and when I crashed my motorbike in March I earned nothing for three weeks. If BX wants to grow, it should grow with us, not on our backs. [2/2]

Resource 3 – Internal email from Tainá Ribeiro to Diego Alves

From: Tainá Ribeiro, Co-founder

To: Diego Alves, Co-founder

Subject: Zonamall’s offer

Zonamall, the online marketplace (a US-owned multinational) that gives us 64 % of our parcels, has offered to buy 60 % of BX for BRL 18 million. It would roll our model out to 40 favelas in Rio de Janeiro, Salvador and Recife within two years. We would keep the BX brand and run operations for three years, but we could no longer deliver for other online shops.

The other options are slower. The development bank would lend us BRL 6 million at 9 % a year to open our own hubs. A community leader in Rio has also asked to run BX as a social franchise (see Resource 5).

If we say no, Zonamall may build its own favela delivery service and stop using us. I don’t want to sell our mission – but I don’t want to lose 64 % of our work either.

CONFIDENTIAL: this email and any attachments are intended only for the named recipients.

Resource 4 – BX operating data

A new hub in another city is expected to have fixed costs of BRL 120 000 a month.

Resource 5 – Message from Marcos Lima, a community leader in Rio de Janeiro

“We want BX in our community, run by our own young people. I can find a warehouse and 50 riders. I would pay BX a franchise fee of BRL 40 000 and a royalty of 5 % of revenue, and follow your training and safety rules. Expect about 60 000 parcels a month after the first year.”

Resource 6 – Survey of BX riders (96 replies)